UAE foreign exchange and remittance companies bullish about 2021

A majority of companies expect foreign exchange business to pick up next year on rebound in tourism and trade

Some of the main factors that will affect the UAE remittance industry in 2021 are changing demographics, labour mobility, unemployment and the current pandemic, according to a new survey. Christopher Pike / The National

More than half of all exchange and remittance houses in the UAE have a bullish outlook for remittances in the coming year, according to a new survey by the Foreign Exchange and Remittance Group.

Six in 10 respondents (61 per cent) also expressed optimism about the foreign exchange trade, indicating their belief that tourism and trade will return to what it was prior to the Covid-19 pandemic, the survey found.

However, 63 per cent of respondents said the pandemic had adversely affected their business, while 49 per cent said remittances will remain subdued in the upcoming months.

The study compiled responses from 60 FERG members made up of leading exchange and remittance companies in the UAE.

“Foreign exchange and remittance companies in the UAE, like many other businesses, have felt the impact of the pandemic,” said Mohamed Al Ansari, chairman of FERG.

“But this hasn’t stopped our industry from functioning and many of the companies have comprehensively changed the way they operate and organise themselves. The overall sentiment towards business in our industry for the coming year remains positive and we look forward to a resilient year ahead.”

Outbound personal remittances from the UAE fell 7.7 per cent, or Dh3.3 billion, in the third quarter of 2020 compared with the same period in 2019, according to the Central Bank of the UAE. There was a reduction in transfers through exchange houses by Dh6.9bn, while outward remittances through banks increased by Dh3.6bn. India, Pakistan and Egypt were the top destination countries for personal remittances from the UAE during 2020.

The UAE registered outward personal remittances worth Dh41.4bn and Dh38.2bn in the first and second quarters of 2020, respectively.

The main factors that would affect the UAE remittance industry in 2021 were changing demographics (27 per cent), labour mobility (23 per cent), unemployment (16 per cent) and the current pandemic (16 per cent), the survey found.

Other concerns include changing oil prices, geopolitical instability and reliance on government expenditure, it added.